On Wednesday, October 28, 2020, the Federal Motor Carrier Safety Administration (FMCSA) hosted a public listening session concerning pending broker transparency rulemaking petitions. These petitions propose to clarify or modify the federal regulations requiring brokers to disclose certain information to carriers, including the amount the shippers paid a broker to arrange a load. Specifically, 49 C.F.R. § 371.3 “Records to be kept by brokers,” provides: (a) A broker shall keep a record of each transaction; including (a)(4) “the amount of compensation received by the broker for the brokerage service performed and the name of the payer;” and (c) “each party to a brokered transaction has the right to review the record of the transaction required to be kept by these rules.”
The petitions have been filed by key industry stakeholders, including the Owner-Operator Independent Drivers Association (OOIDA), the nation’s leading association representing the interests of over 150,000 truck owner-operators and carriers. The Cullen Law Firm, PLLC, serves as legal counsel to OOIDA. Specifically, OOIDA wants FMCSA to require brokers to provide an electronic copy of each transaction record automatically within 48 hours after completion of the contractual service. OOIDA’s petition also wants FMCSA to prohibit brokers from including any provision in their contracts that requires a motor carrier to waive its rights to access the transaction records.
In opposing OOIDA’s petition, the Transportation Intermediary Association (TIA), an association of brokers, has filed its own petition calling for the complete elimination of the regulation.
OOIDA President, Todd Spencer, made the following remarks during the listening session:
“Recordkeeping and transparency requirements have been a central component of broker regulations since their inception and were written to serve the greater public interest.” “Ever since Congress first called for broker regulations 85 years ago, the objective has been to protect the public’s interest in an adequate, economical, and efficient transportation system free from unjust discrimination and destructive competitive practices of unscrupulous middlemen. Therefore, as part of the agency’s mandate to ensure that brokers do not avoid their legal responsibilities by contract, or imposing unreasonable burdensome disclosure conditions, if implemented, FMCSA would not experience any new burdens by adopting the new provisions we are seeking.”
A TIA spokesperson stated that OOIDA’s petition would “codify burdensome regulations that will negatively impact carriers, brokers and the general public,” and that the petitions were prompted by a “temporary economic downturn that upended the supply chain because of a global pandemic.” He defended brokers by stating, “this was not broker price fixing or price gouging. This is an attempt to undermine the free market.”
While most of the participants in the listening session were brokers – who generically complained that disclosure would upset the free market, and audaciously asserted that it was none of the truckers’ “business” to receive the federally mandated information,” several truckers voiced their “real-world” perspectives, including:
1. One owner-operator stated that he learned that on a load for which he bore all of the burden and responsibility for transporting, the broker had pocketed 60% of what the shipper paid.;
2. Another owner-operator stated that truckers are scared to ask a broker for documents, and that fear extended to speaking up at the listening session because of potential broker retaliation and blacklisting. He described that disclosure would help to stop abuses such as double brokering and inflated pricing. He added “This federal regulation was meant to protect the trucker, the shipper and the end-user, who is the consumer.” He further stated that when truckers get lower than market rates, it could affect safety, e.g., when the trucker is financially stretched he may pay less attention to his equipment and hours of service regulations.
3. Finally, a driver from Houston appropriately noted drivers need factual information, and that no one should take advantage of the relationship to take more than their fair share. He summed up by stating that anyone who doesn’t want disclosure “has something to hide.”
Anyone who could not make the broker listening session can still submit comments by going to Regulations.gov, entering the docket number FMCSA-2020-0150 in the “Keyword” block, and clicking “Search.” From there, click on the “Comment Now!” button. Although FMCSA recommends that you include your name, email address, or phone number in the body of your document, if you fear broker retaliation, you may also file comments anonymously, describing why you have that fear in your comments. The deadline is November 18. As of October 28, nearly 1,200 comments are on the docket.